Experts optimistic about growth too
The rate of inflation in the UAE is expected to remain largely steady in 2017, according to the International Monetary Fund.
In their World Economic Outlook report for 2016, the IMF stated that UAE GDP is expected to grow from 2.3 per cent in 2016 to 2.5 per cent in 2017 whereas the inflation rate is expected to decrease by 0.5 per cent from 3.6 per cent to 3.1 per cent.
Faisal Hassan, Head of Investment Research at Kamco, which authored a report on the Middle East findings, said: “This is not a major change, prices of commodities are expected to reduce if not stay marginal in the UAE.
“Inflation right now is very benign, in the UAE it is forecasted to stay between 3.6 per cent to 3.1 per cent which means it will be flat, and we can expect to feel a slight decline too,” he added.
There are three key reasons for the decline, explained Hassan.
He said: “The oil prices have an effect, since most of the commodities are imported in the UAE. The global fall in price of commodities is a contributing factor and the real estate prices in UAE have not gone up either.
“From the outlook of an individual, this is positive. The non-oil GDP in UAE is expected to grow as the country looks to concentrate on By Mahak Mannan other markets like financial services, industrial sector, healthcare and education.”
However, Andrew Prince, financial planner at deVere Acuma said the inflation numbers do not represent the real story. “Generally, when you have a higher GDP, there is higher inflation,” he said.
“In the next 12 months there is going to be plenty of housing availability, so housing is going to be subdued and there will be consistency in the market, but that is if you don’t have children and you do not have to worry about education.
“Take another example, if you are a low-paid worker who earns around Dhs3,000 to Dhs4,000 a month and rent goes up by Dhs100, if you are earning Dhs10,000 a month it does not sound much - but to that individual it is a lot.
“A client of mine has four kids and their school fee has gone up more than 15 per cent.”
He added: “There are lots of positives to come for the UAE economy after 2016, which has been a year of uncertainty, but the numbers do not tell the personal story.”